TITLE:  Lockheed Martin Systems Integration--Owego, B-287190.2; B-287190.3, May 25, 2001
BNUMBER:  B-287190.2; B-287190.3
DATE:  May 25, 2001
**********************************************************************
Lockheed Martin Systems Integration--Owego, B-287190.2; B-287190.3, May 25,
2001

Decision

Matter of: Lockheed Martin Systems Integration--Owego

File: B-287190.2; B-287190.3

Date: May 25, 2001

Thomas Humphrey, Esq., James J. Regan, Esq., John E. McCarthy, Esq.,
Elizabeth W. Newsom, Esq., Daniel R. Forman, Esq., Ariel R. David, Esq., and
Jennifer L. Pomeranz, Esq., Crowell & Moring, for the protester.

Rand L. Allen, Esq., Philip J. Davis, Esq., Paul F. Khoury, Esq., David M.
Southall, Esq., Derek A. Yeo, Esq., and William Colwell, Esq., Wiley, Rein &
Fielding, for Rockwell Collins, Inc., an intervenor.

Raymond M. Saunders, Esq., Maj. Howard W. Roth, and Capt. Richard L.
Hatfield, Department of the Army, for the agency.

Scott H. Riback, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

Protest that agency improperly awarded requirement on a sole-source basis
because it determined that only one firm could meet its requirements is
sustained where record shows that another potential vendor was given an
incorrect understanding of the agency's requirements; agencies are required
to provide potential sources an opportunity to demonstrate their ability to
meet the agency's requirements based on an accurate portrayal of the
agency's needs.

DECISION

Lockheed Martin Systems Integration--Owego protests the actions of the
United States Special Operations Forces Command in connection with the
acquisition of a common avionics architecture system for its fleet of
helicopters. Lockheed maintains that the agency improperly has issued
sole-source delivery orders to Rockwell Collins, Inc. under a contract held
by that firm.

We sustain the protest.

I. BACKGROUND

A. The Rockwell and Lockheed Avionics Systems

The 160th Special Operations Aviation Regiment, Airborne (SOARA) maintains a
fleet of helicopters that have been specially modified to meet unique
mission requirements. These helicopters, while variants of the regular
Army's helicopters [1], currently have different support requirements
because of differences in their configuration. For purposes of this protest,
five different helicopter models maintained by SOARA are relevant: the
MH-47D and MH-47E (variants of the regular Army's Chinook helicopter),
Agency Report, Mar. 5, 2001 (AR), at 2; the MH-60L and MH-60K (variants of
the regular Army's Blackhawk helicopter), id.; and the A/MH-6, variants of a
small, maneuverable helicopter. Id. at 4.

Rockwell designed and maintains its Cockpit Management System (CMS), a
combination of software and hardware that serves to operate all systems on
board the aircraft; it currently is installed on the MH-47D, the MH-60L and
A/MH-6 helicopter models. The CMS operates on the Control Display Unit
(CDU), a Rockwell-proprietary processor. While the government has
"government purpose" data rights to some of the CMS software [2] (in
particular, the Operational Flight Program software within the CDU), it does
not have data rights with respect to various other elements of the CMS
software. [3] Consequently, the government is unable to competitively
acquire its software maintenance and enhancement requirements for the CMS as
it is presently constituted. The software that comprises the CMS is written
in what is regarded as a higher order computer language, ADA.

Lockheed designed and maintains a different system, the Integrated Avionics
System (IAS), which is installed on the MH-47E and MH-60K helicopter models.
The IAS, like Rockwell's CMS, is a combination of hardware and software. The
hardware includes a Lockheed-proprietary mission processor, as well as a
display processor that is proprietary to Honeywell. The IAS has several
hardware obsolescence problems. Specifically, the multifunction display
units, the cathode ray tubes and the mission processors that are installed
on all of the helicopters that employ the IAS are out of production.
Further, the display processors installed on all helicopters employing the
IAS are at capacity, so that no new functionality can be added to that
system. As for the IAS software, while the agency has government purpose
rights, the software is written in a computer language known as JOVIAL,
which is not regarded as a higher order language.

Currently, each firm has contractual responsibility to provide support for
its respective system; these indefinite-delivery, indefinite-quantity
contracts, awarded on a sole-source basis, are referred to as the
post-deployment software support (PDSS) contracts. Delivery orders awarded
under Rockwell's PDSS contracts are the subject of the current protest.

B. The Common Avionics Architecture System (CAAS) Initiative

The CAAS initiative is designed to provide new software and hardware for the
helicopter cockpits in question. The overall immediate objective is to
develop a common avionics software system that can be deployed across all of
the different helicopter models used by SOARA. In addition, there is
interest within the regular Army in fielding a common cockpit architecture
for its Chinook and Blackhawk fleets that would be the same as the CAAS
envisioned for the SOARA fleet, thereby ultimately establishing commonality
among numerous Army helicopters. This acquisition is for development of the
software only. (The agency states that it intends to conduct a competition
for the hardware requirement. COS at 28.) The CAAS will address the
obsolescence issues identified with respect to Lockheed's IAS, as well as
the limitations relating to the fact that the IAS software is written in
JOVIAL (by requiring that the upgraded software be written in a higher order
language).

The agency requires the CAAS to meet what are referred to as "open system"
requirements. In general, the new software will be required to meet
standards established in the Joint Technical Architecture--Army (JTA-A). AR
exh. 45. This is essentially a set of standards and protocols established to
achieve commonality among all Army software. Three central features of JTA-A
compliance are that the software must be written in one of three higher
order languages (ADA, C or C++), must comply with one of four portable
operating system interface standards (POSIX), and must be written using
commercially available standards that are widely recognized and adopted by
the information technology industry. Hearing Transcript (Tr.) at 6-10. The
central objectives with these requirements are that they allow an outside,
third-party vendor to write upgrades or changes to the software (i.e., it is
amenable to competitive acquisitions) and that the software be "portable"
from one platform (helicopter model) to another. Tr. at 4-10.

Another aspect of the open systems requirement for the CAAS is that the
software be written in partitioned modules. Modularity can be described as
software architecture that places discrete program functions within
encapsulated units that are partitioned from the rest of the software;
sometimes these software modules are described as "virtual machines." Tr. at
4, 65-67. This modularity has benefits in terms of lowering maintenance
costs (work on one module can be accomplished and tested without affecting
other modules) and also in terms of aircraft safety. Tr. at 57, 65-67. In
addition, modularity allows for use of the software on different hardware
platforms by deploying more or fewer modules, depending on differing
requirements. Tr. at 69-70. This is referred to as scalability; the
objective is to have a single "product line" of software modules that can be
scaled up or down to meet different aircraft requirements. Id. A third
aspect of the agency's open system requirement is that the software does not
require a particular piece of hardware to function (as is currently the case
with both the CMS and IAS systems). A final aim of the CAAS initiative is to
integrate several new or improved capabilities into the entire fleet of
helicopters, including, for example, integration of what is referred to as
the improved data modem (IDM).

To summarize, the agency wants to acquire JTA-A compliant, open system
software that is written in a higher order language, is POSIX compliant, and
is modular, scalable and portable from one aircraft to another, without
hardware dependencies. The agency also seeks to integrate several new or
improved capabilities.

II. CHRONOLOGY

After studying the question at some length, [4] the agency concluded that
conducting a full and open competition for the CAAS was not a reasonable
course of action, because it would result in substantial duplication of
costs (that is, any savings generated as a result of a competition would be
offset by the money already invested in the CMS and IAS). COS at 8-9; Tr. at
72. Accordingly, the agency decided to query only Rockwell and Lockheed to
discover the approximate cost and schedule involved in having either firm
meet the CAAS requirement. The agency had a number of meetings with Rockwell
and Lockheed, on the basis of which it concluded that Lockheed could not
meet its requirements; the agency therefore proceeded to make a sole-source
award to Rockwell. The information which the agency conveyed orally about
its requirements at certain of the meetings with Lockheed is key to the
protest.

A. Early meetings

The agency began meeting with Lockheed in 1999. During an October 1999
meeting, the agency expressed to Lockheed the idea of a fleet-wide
upgrade--that is, an upgrade of all SOARA helicopters, including those
running on both Lockheed's IAS and Rockwell's CMS. Tr. at 146-47. The record
shows that the agency did not know how much funding would be available for
purposes of accomplishing a fleet-wide upgrade; it thus advised that it
might have to accomplish the task incrementally, but that it viewed a new
MH-47E then being built as the logical starting point for initiating its
upgrade effort. Tr. at 148, 149-51. The agency also expressed the desire to
coordinate its upgrade program with a larger Chinook service life extension
program (SLEP) being conducted by the regular Army for its helicopters, in
hopes of getting the regular Army to fund the SOARA upgrade. Tr. at 152-53.

A December 1999 briefing followed, during which Lockheed responded to the
requirements laid out by the agency at the October meeting. Discovery
Document (DD) 40. Lockheed recommended a combination of hardware and
software to meet the agency's upgrade requirement. Lockheed suggested four
alternatives for addressing the software problem--[deleted]. DD 40 at 16.
Thereafter, during January and February 2000 briefings, Lockheed was advised
for the first time that the agency was definitely looking for a SOARA
fleet-wide solution--that is, again, a solution that would include
helicopters running both Lockheed's IAS and Rockwell's CMS. Tr. at 191.

B. April 2000

At an April briefing, in response to the agency's advising that a fleet-wide
solution now was mandatory, Lockheed presented a solution based on a
hardware/software combination, AR, exh. 43, at 2, and recommended [its first
approach]* [5] for [deleted]. Id. at 5. During the hearing conducted by our
Office in connection with this protest, Lockheed's engineers explained that
Lockheed's [first approach] involved [deleted]. Lockheed's engineers
estimated that, using this approach, they would need to [deleted], Tr. at
228, that the cost for this approach was approximately [deleted], and that
it would take approximately [deleted], including flight testing. Tr. at
258-59.

Lockheed recommended a [deleted], approach to integrating the entire fleet
using a single software architecture, in part to respond to the agency's
funding limitations, AR, exh. 43, at 3; Tr. at 206-08, and in part because
it considered it necessary to obtain additional detail about two of the
Rockwell helicopter models, the MH-60L and the A/MH-6. Tr. at 208-11. [6]
Specifically, Lockheed felt it needed to know about the PVIs in order to
understand how the entire system architecture for those models (hardware,
software and PVI) would look. Tr. at 208-10. Lockheed's engineers testified
that [deleted]. Id.

C. August 8, 2000

On August 8, the agency met with Lockheed to provide, among other things,
feedback on Lockheed's draft presentation (based on the approach presented
at the April meeting) for a scheduled August 31 briefing. Lockheed's
approach continued to include [deleted], and also remained [deleted] in
nature--[deleted]. Hearing exhibit 1 at 19. Before Lockheed had completed
its presentation, it was interrupted by the agency's program manager, who
proceeded to advise Lockheed for the first time, among other things, that:
(1) the agency wanted a purely software solution and was not interested in
the hardware Lockheed had been proposing up to this point, Tr. at 263-64;
(2) there would be a common PVI, but Lockheed should stop focusing on
[deleted], Tr. at 264-65; and (3) the fleet-wide architecture was required
at the outset of the effort, and had to take into consideration the
possibility of extension to other models of regular Army helicopters,
specifically, the CH-47F and UH-60M models. Tr. at 264-65, 322-24.

D. Subsequent Events

After receiving the information on August 8, Lockheed abandoned its [first
approach] in favor of [its second approach]. Tr. at 299-300. Lockheed
presented its [second approach] during a briefing on August 31, but did not
present definitive cost or schedule information at that time. However, based
on information conveyed by one of the agency's other attendees (a member of
the user community) at the August 31 briefing, Lockheed concluded that it
may have been misled during the August 8 meeting. Lockheed concluded that,
technically, it was possible to continue with its [first approach] instead
of proposing [its second approach]. Nonetheless, Lockheed was subsequently
instructed in September to provide the agency cost and schedule information
for its [second approach], and it did so. The record shows that
accomplishing the [second approach] would cost approximately [deleted] and
take approximately [deleted] (exclusive of flight testing). AR at 7. In
contrast, the record shows that the [first approach] would cost
approximately [deleted] and take approximately [deleted] including flight
testing. Tr. at 258-59. The agency relied on the cost and schedule
associated with the [second approach] to conclude that Lockheed was not a
viable source for the requirement. On the basis of that conclusion, the
agency, in January, 2001, executed a justification and approval (J&A) for
the award of a sole-source contract to Rockwell on grounds that Rockwell was
the only source capable of meeting the agency's requirements. AR exhs. 64,
77. The agency then made award of the delivery orders that are the subject
of this protest under Rockwell's PDSS contract.

III. ARGUMENTS

Lockheed argues that the inaccurate information presented during the August
8 meeting, as well as the agency's subsequent demand for cost and schedule
information for the [second approach], led it to abandon its [first
approach]in favor of [its second approach]. According to the protester, the
record shows that it had provided an acceptable technical solution to the
agency during its April briefing, and it had intended to continue
recommending that approach until it met with the agency on August 8 and was
provided two essentially new requirements (to design the software
architecture so that it could be extended to the three regular Army
helicopters models that had been mentioned, and [deleted]). Lockheed
contends that these in fact are not agency requirements and that, without
these requirements, it would not have abandoned its [first approach], which
was a valid means of meeting the agency's needs at a substantially lower
cost and shorter timeframe than the [second approach] it essentially was
forced to adopt. Lockheed also asserts that Rockwell has an impermissible
conflict of interest.

The agency responds, first, that the protest arguments are untimely. On the
merits, it asserts that Lockheed was told nothing new at the August 8
meeting; as during all other meetings, it told Lockheed the same top-level
requirements on August 8: the software had to be JTA-A compliant, open
system software that is written in a higher order language, is POSIX
compliant, and is modular, scalable and portable from one aircraft to
another, without hardware dependencies. The agency (and Rockwell) conclude
that Lockheed therefore had a meaningful opportunity to respond to the
agency's needs, and that the approach finally selected by Lockheed therefore
provided a reasonable basis for the agency to conclude that Lockheed was not
a viable source.

IV. ANALYSIS

A. Timeliness

Preliminarily, the agency and Rockwell maintain that Lockheed's protest is
untimely because, as early as October 4, 2000, Lockheed was aware of the
fact that delivery order No. 9 (block one of the CAAS effort) had been
awarded to Rockwell on September 29. [7] According to these parties,
Rockwell presented a briefing on October 4 that outlined the essential
features of the CAAS; they maintain that Lockheed should have known from
this briefing all information necessary to protest the agency's actions. The
parties conclude that, because Lockheed did not file its initial protest
until February 1, 2001, the protest grounds relating to delivery order No. 9
are untimely. See Bid Protest Regulations, 4 C.F.R. sect. 21.2(a)(2) (2001)
(protests must be filed within 10 days after protest grounds were, or should
have been, known). The agency and Rockwell further assert that all
subsequent grounds of protest also are untimely because they are based on
information discovered in connection with Lockheed's pursuit of its original
protest. See General Physics Fed. Sys., Inc. B-272795, Jan. 6, 1997, 97-1
CPD para. 8 (where initial protest is untimely, subsequent protest grounds based
on information learned as a result of filing the initial untimely protest
also are untimely).

We find that the protests are timely. The record shows that Lockheed met
with the agency on November 1, 2000 to present what turned out to be its
final briefing on its approach to the CAAS. AR exh. 57. Regardless of the
October briefings, it was reasonable for Lockheed to assume that the agency
still was considering its approach, and had made no decision regarding
selection of a fleet-wide solution. Thereafter, on November 27 and December
20, the agency published Commerce Business Daily (CBD) announcements of its
intention to modify Rockwell's PDSS contract to include the effort necessary
to develop a fleet-wide CAAS, and solicited expressions of interest. AR
exhs. 58, 63. Lockheed responded with an expression of interest on January
9, 2001. AR exh. 70.

On January 16, Lockheed sent a facsimile and e-mail to the contracting
officer inquiring about a press release in which Rockwell apparently had
announced that the agency had selected Rockwell as the vendor for the
fleet-wide CAAS. AR exh. 74. In response, the contracting officer sent
Lockheed a letter, dated January 16 (AR exh. 74), expressly stating:

[SOARA has not selected Rockwell for the entire SOARA fleet]. The use of
language [in the article] that encompasses the entire fleet is erroneous.
Any decision to encompass the entire fleet is pending resolution as a result
of your [expression of interest].

Lockheed did not actually receive a copy of delivery order No. 9 until
January 22--fewer than 10 days before it filed its protest--and Lockheed was
not advised that its expression of interest had been rejected until February
12, almost 2 weeks after it filed its initial protest. AR exh. 84. We
conclude that the agency's actions between October (when Lockheed attended
the delivery order No. 9 briefings) and February 1 (when it filed its
protest) were such as to reasonably lead Lockheed to conclude that no source
selection decision had been made for the agency's fleet-wide CAAS, and that
the protest therefore is timely.

B. Determination That Lockheed Was Not A Viable Source

The overriding mandate of the Competition in Contracting Act of 1984 (CICA)
is for "full and open competition," 10 U.S.C. sect. 2304(a)(1)(A) (1994 and
Supp. IV 1998). We closely scrutinize sole-source procurements conducted
under the exception to that mandate authorized by 10 U.S.C. sect. 2304(c)(1),
which permits an agency to award a sole-source contract where it properly
determines that only one responsible source can meet its requirements. When
an agency uses noncompetitive procedures under section 2304(c)(1), it must
execute a written J&A with sufficient facts and rationale to support the use
of the specific authority, FAR sect.sect. 6.302-1(c), 6.303, 6.304, and publish a
notice in the CBD to permit potential competitors to challenge the agency's
intent to procure without full and open competition. 10 U.S.C. sect. 2304(f).
Our review of an agency's decision to conduct a sole-source procurement
focuses on the adequacy of the rationale and conclusions set forth in the
J&A. When the J&A sets forth reasonable justifications for the agency's
actions, we will not object to the award. On the other hand, where the
record shows that the agency has failed to adequately justify its
sole-source award decision, we will sustain the protest. Support Serv.
Int'l, Inc., B-271559, B-271559.2, July 16, 1996, 96-2 CPD para. 20 at 2-3.

Here, the agency prepared a J&A that relied on the exception to full and
open competition outlined in 10 U.S.C. sect. 2304(c)(1). The J&A expressly
relied on the cost and schedule of the [second approach] recommended by
Lockheed in its August 31 briefing (as opposed to the [first approach]
offered in earlier briefings). AR exhs. 64, 77. Based on the record--in
particular, the hearing testimony--we agree with Lockheed that it was misled
as to the agency's requirements during the August 8 meeting, and that this
led it to abandon its [first approach] in favor of a higher-cost, longer
schedule [second approach]. As a result, the agency's sole-source
determination was based on a flawed assessment of Lockheed's capabilities
and, therefore, was unreasonable. We discuss in detail below the actions
which, in our view, prejudiced Lockheed in its effort to demonstrate its
capability as a viable source for the agency's requirements.

1. Effect of the August 8 Information

a. Inclusion of Regular Army Helicopters

Lockheed's engineers testified [8] that the new information presented on
August 8 led them to conclude that they needed to abandon the [first
approach] in favor of a plan involving [the second approach]. In particular,
they testified that they decided that their [first approach] would not work,
especially due to Lockheed's lack of detailed knowledge about a (now) much
larger number of aircraft models--including the regular Army's CH-47F and
UH-60M--and the agency's indication that the entire software architecture
for all aircraft had to be the focus from the outset of the effort. For
example, one of Lockheed's engineers stated, "We're going to do [the first
approach], but there's new parameters entering the equation about what has
to be done when, and which methodology to use to do it." Tr. at 273-74. He
stated further, "The fact that it had to go in all at once would tend to
swing it [the first approach] over that maybe we need to go back and
reevaluate the [second approach]." Tr. at 274.

This engineer explained some of the difficulties associated with the
introduction of the regular Army fleet. He testified that, while the [first
approach] would work when considering only the SOARA fleet of aircraft,
introduction of the regular Army aircraft precluded using that approach
because this would involve not only the availability of data relating to all
of the aircraft (both SOARA and regular Army), but also the practicality of
establishing uniform standards among the users of the aircraft. Tr. at
309-10. He testified that, although Lockheed could probably obtain the data
and establish uniform standards for the SOARA fleet alone, doing so for both
the SOARA and regular Army fleets at the same time would simply be
unrealistic. Tr. at 309-10. Additionally, both of Lockheed's engineers
testified (in response to questioning by our Office's hearing official),
that the addition of the regular Army helicopter models was directly related
to the firm's decision to abandon the [first approach] strategy in favor of
[the second approach]; they stated unequivocally that they could have
continued with the [first approach] if only the SOARA fleet were involved.
Tr. at 308-09.

We find this testimony persuasive. It supports Lockheed's claim that, as a
consequence of the information given at the August 8 meeting (in particular,
the representation that the software would need to be extendable to several
models of regular Army helicopters at the outset), Lockheed abandoned its
[first approach] in favor of [its second approach], which it presented at
all subsequent briefings. But for that information, Lockheed would have
continued pursuing its [first approach].

The record further shows that, in fact, the inclusion of regular Army
helicopters, while considered desirable by the agency, in fact was not
necessary to meet SOARA's requirements. Further, to the extent that
inclusion of the Army helicopters could be achieved, it would not have to be
achieved at the outset of the effort, contrary to Lockheed's understanding
following the August 8 meeting. In this regard, one of the agency's program
managers (who did not attend the August 8 meeting) testified that the agency
was looking for a scalable software package that could some day be extended
to the regular Army helicopters, but that the agency never said (and did not
require) that this had to be accomplished at the outset. Tr. at 323. When
this representation was made during the hearing, one of Lockheed's engineers
disagreed, maintaining that, in fact, Lockheed had been told on August 8
that several Army helicopter models had to be included at the outset.
Tr. at 323-24. The agency's second program manager (who attended the August
meeting and gave the feedback that caused Lockheed to change its approach)
conceded that, in fact, Lockheed's engineer "may be correct." Tr. at 324.

Considering the hearing testimony as a whole, we find that it supports
Lockheed's position that, contrary to the agency's actual needs, Lockheed
was led to believe at the August 8 meeting that the regular Army helicopters
were to be included in the effort from the outset.

b. Confusion Regarding "System" Architecture (Software, Hardware and PVI)

The record shows that Lockheed was also misled during the August 8 meeting
with respect to one of its central assumptions regarding system architecture
(as opposed to simply software architecture). Lockheed's engineers testified
that the concept of system architecture in this context encompasses not only
software, but also processing resources, display resources and data
input/output resources, Tr. at 265-68, and that the PVI was key to
conceptualizing the system architecture. Tr. at 268. As discussed, Lockheed
had assumed that it would begin its [first approach] using [deleted] . This
approach would work, provided that the system architecture, functionality
and PVI of the [deleted], and that only the SOARA helicopters were under
consideration.

Lockheed's engineers testified that they abandoned the [first approach]
after being told at the August 8 meeting that the system architecture,
functionality and PVI for the [deleted]. Tr. at 268-69. They shifted to the
[second approach] because it was the only way to accommodate so many
different system architecture/PVI

configurations (both SOARA and regular Army aircraft), and that it could not
develop its approach starting with the MH-47E/MH-60K functionality. [9]

Contrary to the information conveyed at the August 8 meeting, the record
shows that Lockheed's proposed use of the MH-47E/MH-60K system
architecture/PVI as a model for a common system architecture/PVI (consistent
with Lockheed's [first approach]) was in fact acceptable to the agency. One
of Lockheed's engineers testified that he arrived at this conclusion after
one of the agency's user community officials attending the August 31
briefing expressed surprise that Lockheed was presenting what he described
as [deleted]. Tr. at 300-01, 321-22. We find nothing in the record showing
that this conclusion by Lockheed was incorrect.

We conclude from this uncontroverted testimony that the incorrect advice
given on August 8 concerning the system architecture/PVI requirements also
contributed to Lockheed's decision to abandon its [first approach].

As a final matter, we note that the record supports the conclusion that the
technical approach outlined by Lockheed during its April briefing (which it
had intended to present at its August 31 briefing) was acceptable. In this
regard, during the hearing, one of Lockheed's engineers provided a detailed
explanation of Lockheed's [first approach] as it was presented during that
briefing. Tr. at 222-28. During that explanation, the agency's program
manager stated, "That's exactly what we wanted." Tr. at 226. This testimony
from the agency's own program manager supports Lockheed's position that the
agency considered Lockheed's [first approach] an acceptable means of meeting
the agency's requirement.

c. Lockheed Instructed to Provide Cost and Schedule for Complete Rewrite

Finally, Lockheed was instructed by the agency on September 25 to prepare a
cost and schedule estimate based on [the second approach]. In this regard,
the record includes an e-mail from the agency to the protester stating as
follows:

The government ha[s] repeatedly asked for cost and schedule for [the second
approach], unrestricted by Government resources. I do not understand why you
will not present an estimate for [the second approach] similar to the
estimates in cost and schedule you ha[ve] volunteered for [the first
approach]. . . . It now appears that you are nonresponsive.

DD 179, Sept. 25, 2000. Lockheed's engineers testified that they understood
this e-mail to be an express instruction to provide cost and schedule
information for the [second approach]. Tr. at 326-28. As a result, the firm
presented its cost and schedule information for the [second approach] at its
November briefing, and the agency relied on that information in determining
that Lockheed could not meet its requirement.

d. Conclusion

Viewing all of the testimony together, we are left to conclude that Lockheed
had developed an acceptable approach as of the April meeting, and that it
was misled by the agency's August 8 statements into abandoning it in favor
of a more expensive, longer timeframe, [second approach]. The agency's
September 25 demand for the cost and schedule for the [second approach]
confirmed Lockheed's understanding that it was being asked to propose the
more expensive, longer timeframe alternative.

Where, as here, an agency awards a sole-source contract on the basis that
only one source can satisfy its requirements, it is required to provide
other prospective sources notice of its intentions, and an opportunity to
respond to the agency's requirements. 10 U.S.C. sect. 2304(f). It is implicit in
this exercise that the agency must adequately apprise other prospective
sources of its needs so that the prospective sources have a meaningful
opportunity to demonstrate their ability to provide what the agency seeks to
purchase. While the language of CICA does not specifically address this
point, the legislative history of the statute does. In this regard, the
conference report specifically states:

In situations where competition is not anticipated and solicitation packages
have not been prepared, agencies shall provide potential competitors who do
respond [to the CBD announcement of the agency's intent to award a
sole-source contract] with solicitation packages or comparable information.

H.R. Conf. Rep. 98-861 at 1427 (1984); see also Businessland, Inc., GSBCA
No. 8586-P-R, Sept. 4, 1986, 86-3 BCA para. 19,288 (agency must convey its
requirements to potential sources in writing).

While there is no requirement that an agency express its needs by any
particular means, it appears that, had the agency here provided Lockheed a
clear, written statement of its requirements, Lockheed would have been
assured a meaningful opportunity to demonstrate its capability to satisfy
the agency's needs. While Lockheed may have "selected" the [second
approach], it did so only in response to the misleading information
presented by the agency, and Lockheed's approach therefore did not reflect
its true capability to meet the agency's legitimate requirements. The
agency's actions in providing Lockheed misleading oral guidance at the
August 8 meeting, coupled with its demands for cost and schedule information
based on the [second approach], clearly prejudiced Lockheed in its effort to
show that it was a viable alternative source for its requirement.
Accordingly, we conclude that the agency's sole-source determination was
unreasonable, and sustain the protest on this ground.

C. The Agency's Schedule Considerations

Considerable attention has been devoted by the agency to explaining why
various schedule considerations led to its conclusion that only Rockwell can
accomplish the CAAS effort. Although (as discussed above) it appears that
Lockheed could have met a [deleted] schedule (i.e., the same as Rockwell's)
using its original [first approach], we do not think the agency's schedule
concerns, in any event, provided legitimate support for the agency's
sole-source determination.

The record shows that, in order to address the obsolescence issues
associated with the MH-47Es and MH-60Ks, the CAAS program does not need to
be qualified for aircraft installation until the first quarter of fiscal
year 2004 for the MH-47Es and the fourth quarter of fiscal year 2004 for the
MH-60Ks. COS at 14, 17. In contrast, the Army's Chinook SLEP begins in
fiscal year 2003, and SOARA's participation in the program imposes numerous
additional schedule demands. For example, the agency states that it must
integrate one of the new functionalities (the Dual Embedded Global
Positioning System /Inertial Navigation Unit) into the CAAS immediately so
that this system can be installed on the MH-47Ds during a block modification
scheduled for the last quarter of fiscal year 2001. COS at 15. This
apparently is a condition precedent to inducting the MH-47Ds into the
regular Army's Chinook SLEP. [10]

The agency essentially adopted the Army's SLEP schedule because, if it
participates in the Army SLEP, the Army, rather than the agency, will bear
the cost of upgrading SOARA's Chinook helicopters (the MH-47D and MH-47E
models). SOARA states that it "will avoid millions [of dollars] in costs it
would otherwise have to spend because of its obsolescing fleet." COS at 13.

In our view, the more stringent schedule was not a valid requirement against
which to assess Lockheed's ability to perform. While the more stringent
schedule requirements may enable the agency to have its requirement funded
by the regular Army, there will be no actual savings to the government as a
whole as a result of this funding scheme; either one or the other activity
will have to pay for the upgrade. CICA specifically proscribes using
sole-source contracting methods where they are justified based on concerns
related to the amount of funds available to the contracting agency or
activity. 10 U.S.C. sect. 2304(f)(5)(A); see also FAR sect. 6.301(c). We conclude
that it was improper for the agency to rely on an expedited schedule in
determining Lockheed's ability to meet its needs.

D. Organizational Conflict of Interest (OCI)

Lockheed maintains that Rockwell has an impermissible OCI because it has
written the statement of work and technical description for the CAAS.
Lockheed maintains that, because Rockwell authored these documents, it
cannot also provide the CAAS software or hardware. [11] Lockheed directs our
attention to FAR sect. 9.505-1 which provides:

A contractor that provided systems engineering and technical direction for a
system but does not have overall contractual responsibility for its
development, its integration, assembly, and check out, or its production
shall not--

(1) Be awarded a contract to supply the system or any of its major
components.

This argument is without merit because the delivery orders in question call
for Rockwell to have overall contractual responsibility for the CAAS's
development, integration, assembly, check out and production (in the sense
that Rockwell will develop, integrate, assemble, check out and produce
software to which it will provide government purpose data rights to the
agency). AR exh. 54; Agency Letter, Encl. 2, Apr. 2, 2001. As such, the
regulation has no application since, by its terms, it is limited to
contractors providing systems engineering and technical direction that do
not have the additional responsibilities stated in the regulation. See also
FAR sect. 9.505-2(a)(3).

V. RECOMMENDATION

While we ordinarily would recommend that the agency either conduct a
competition for the requirement or otherwise provide Lockheed a reasonable
opportunity to respond to the agency's requirements, here the agency
proceeded with performance of the requirement notwithstanding Lockheed's
protest, based on its conclusion that urgent and compelling circumstances
significantly affecting the interests of the government would not permit it
to wait until our decision was issued. AR exh. 86; Agency Letter, Mar. 26,
2001. Under these circumstances, our recommendation must take into account
potential cost and disruption. 4 C.F.R. sect. 21.8(b). We are unable to
determine from the record whether the extent of performance or the agency's
legitimate schedule needs would render it impracticable at this juncture to
provide Lockheed an opportunity to respond to the agency's requirement.
Accordingly, we recommend that the agency determine whether it is
practicable to provide Lockheed such an opportunity, and then take action
consistent with its determination. (In light of our conclusions above, the
Army's SLEP program schedule would not appear to be a proper basis for
determining the feasibility of this corrective action.) We also recommend
that the agency reimburse Lockheed the reasonable costs associated with
filing and pursuing its protest, including reasonable attorneys' fees. 4
C.F.R. sect. 21.8 (f)(1). Lockheed's certified claim for costs, detailing the
time spent and the costs incurred, must be submitted to the agency within 60
days of its receiving our decision.

The protest is sustained.

Anthony H. Gamboa
General Counsel

Notes

1. The contracting agency is the United States Special Operations Command, a
Department of Defense component comprised of elements from the Army, Navy
and Air Force. Contracting Officer's Statement (COS) at 5. As used in this
decision, the phrase "regular Army" refers to the Department of the Army.

2. See Federal Acquisition Regulation (FAR) sect.sect. 27.402 and 27.408 for a
description of the nature and purpose of government purpose data rights.

3. The government does not own data rights to the display software, the
weapons control software or the development environment.

4. The agency commissioned the Software Engineering Institute at Carnegie
Mellon University (SEI) to evaluate the feasibility of migrating both the
IAS and CMS systems to a modular, open systems architecture. SEI issued a
report in January 2000.

5. In this redacted version, "first approach" and "second approach" have
been used in brackets to identify Lockheed's two proprietary approaches.

6. For example, according to Lockheed's engineers, the helicopter avionics
system on the MH-60L is significantly less integrated than the systems
installed on the Lockheed models (the MH-47E and MH-60K) as well as the
other Rockwell Chinook model (the MH-47D). In addition, Lockheed at the time
was under the impression that the pilot-vehicle interface (PVI) on the
MH-60L was different (in that it had only two display screens as opposed to
the four display screens found on the other models). AR, exh. 43, at 3; Tr.
at 207-09.

7. Rockwell states that it also discussed delivery order No. 9 with Lockheed
at an October 19 meeting. Rockwell additionally maintains that Lockheed's
protest should be dismissed because the firm failed to diligently seek a
copy of delivery order No. 9 after attending both October briefings.

8. A large portion of testimony took the form of a "walk through" of the
various meetings and briefings by the parties, during which personnel from
the agency and Lockheed described the events during the times in question.
This was done in a round-table setting so that the principals from each
party could debate the events.

9. The agency program manager who provided the August 8 advice did not deny
that he had told Lockheed to stop focusing on the MH-47E/MH-60K system
architecture/PVI. Rather, he explained that his advice on August 8 was
intended to convey to Lockheed the need for the software to be scalable to
various different system architectures, and to be independent of hardware.
Tr. at 275-82. He also testified that his advice was intended primarily to
assist Lockheed in preparing a briefing that would be acceptable to the
agency's selection official. He testified that his advice was intended to
help Lockheed "protect itself" during its briefing with the selection
official. Tr. at 282.

10. There are numerous other schedule drivers identified by the agency that
arise in connection with the regular Army's Chinook SLEP.

11. Lockheed's protest also takes issue with a sources-sought synopsis that
the agency issued in the CBD on January 3, 2001, relating to its anticipated
issuance of a competitive solicitation for the hardware suite for the CAAS.
AR, exh. 65. Lockheed makes several arguments relating to that synopsis,
including that Rockwell has an improper OCI with respect to furnishing
hardware. Since the agency has not issued a solicitation or taken any other
action in connection with its contemplated hardware acquisition, Lockheed's
allegations merely anticipate improper agency action, and thus are
premature. See Ervin and Assocs., Inc., B-279161 et al., Apr. 20, 1998, 98-1
CPD para. 115 at 5.